High Frequency Trading is in the news again. HFT is highly computerized stock trading, which secures faster execution for bigger computers located physically closer to the stock exchange. It now amounts to over half the daily flow on the stock exchanges. Critics argue it amounts to legalized front-running, is unethical, and should be illegal.

“How dare you accuse us being unethical! We are the ones cutting margins, you are the ones being unethical.”

Ms. Aldridge’s response captures perfectly the moral flip-flop that business has achieved in the past few decades. Never mind whether HFT amounts to front-running, involves collusive behavior by the exchanges, or is unfair to retail investors, says Ms. Aldridge – the moral high ground, the Ethical Trump Card, is Low Cost. In the name of lower prices, even fractions of pennies, all is justified.

The Gospel of Walmart

Let’s leave Wall Street for Main Street. We all know the Walmart story – low prices all the time. But as a Fast Company article wrote, back in 2007:

The giant retailer’s low prices often come with a high cost. Wal-Mart’s relentless pressure can crush the companies it does business with and force them to send jobs overseas. Are we shopping our way straight to the unemployment line?

If revenue were GDP, Walmart would be the world’s 25th largest economy. That is pretty big market power.

Walmart’s benefits are clear: lower prices, all the time, for millions of consumers. But along with those costs come trade-offs. The reduction of brand power. The exporting of jobs. The reduction of pay and benefits for workers in the name of lower costs to consumers.

More insidiously, what we get in the Walmart deal is lowest-common-denominator consuming. We get buyers who aren’t presented with quality alternatives, can’t recognize them if they are presented, and are trained to view low price as the primary Pavlovian trigger for purchasing.

The Tyranny of Low-Cost Strategies: Linking Wall Street and Main Street

What links high frequency trading to Walmart? There is a common ancestor in the family tree of business thinking.

In the 1970s, thinking about business strategy took an abrupt turn – from CUS to COM. That is, from being about the company’s relationship to its customers, to being about the company’s relationship to its competitors. (If you’re interested, the leading thinkers were Bruce Henderson, Michael Porter, and the Boston Consulting Group).

By 1980, the conversion was complete: anytime anyone said “strategy,” you knew it meant “competitive strategy.”

One of the most powerful points Porter made in his classic Competitive Strategy was that there were two successful generic strategies, and the first of them was Low Cost Producer. He who got the lowest cost got the greatest volume, which led to higher market share and higher profits, which led to lower costs, and so on. It was a road toward legal monopoly, insofar as laws permitted.

Porter’s rules were learned very well: by Jack Welch at GE, by Walmart, by the mortgage business, by Wall Street traders, and by every exec ed program in every business school in the world. It became – and I do not use the word lightly – gospel truth that the highest business good was to lower costs.

The root purpose of lower costs was to gain sustainable competitive advantage for the company. But the collateral benefit, the offshoot which could be spun for great PR, was that the consumer benefited as well. Allegedly.

This insight took only a little bit of tweaking (let’s revise Adam Smith and Milton Friedman, season with a dose of Ayn Rand and a dash of Alan Greenspan, and voila!) to come up with an ideology that said not only is low cost a successful business strategy, it is also the Key to Capitalism, which in a capitalist society is also the source of ethics. Allegedly.

This is how we get to Ms. Aldridge’s high dudgeon at being accused of unethical behavior (“Moi?!”) In this all-too-common alternative view of the world, profit underlies ethics, business success is the root of morality, and low cost is the Ur-explanation that requires no further referent point for ethical discussion.

“We are the ones cutting margins – you are the ones being unethical.” In that statement, the transformation is complete: low cost is the new moral high ground.

Our Story Timeseries brings you real, personal examples from business life that shed light on specific ways to lead with trust. Our last story proved that good intentions won’t keep you from screwing up. Today’s story highlights the business value of taking time to see the world from another’s perspective.

Today’s story is excerpted from our chapter on training for trustworthiness. It vividly demonstrates how a little role-playing—walking in your clients’ shoes—goes a long way.

From the Front Lines: Role-Playing Pays Off

The value of role-playing couldn’t be highlighted any better than the example that one of our course participants experienced in real time at one of my (Charlie’s) sessions. The exercise asked a group of business leaders to play the role of one of their most challenging clients while a colleague held a typical meet-and-greet.

One male partner chose a woman who was then a presidential appointee at one of Washington’s largest government agencies. The partner was flummoxed by two aspects of the relationship. One, a number of her direct reports were using the services of his organization, so he had to be careful of jumping the chain of command. Two, she kept asking for feedback, and what others inside and outside the organization were saying about her, a question he didn’t feel he could answer without jeopardizing the firm’s relationship.

The exercise got off to a good start, but then the ‘client’ asked over and over: ‘How are we doing?’

The other executive in the role play finally said: ‘Why do you keep asking that?’

The ‘client,’ the senior partner, answered quickly: ‘I’m just looking for information.’

A light bulb went off: she hadn’t been asking about how her staff felt about her; she was looking for information outside her own glass bubble as a senior official.

The senior partner immediately shot off an e-mail asking his client to have coffee and catch up. She answered right away with: ‘I’ll buy.’

Always Be Publishing

The idea is simple enough; instead of talking about yourself, start a conversation. Don’t pitch yourself; instead, “Create a story that looks and feels like a real news story.” The article promises, “The more you share with others and the more often you invite others to participate and converse with you, the more likely your content will be shared.”

Fine, but note that if everyone followed this advice, we’d be inundated with posts on LinkedIn, Quora, Facebook et al, with everyone positioning themselves as a discussion-leading expert, whose objective is to drive more and more traffic, until we drown in traffic.

Oh wait, that’s pretty much what’s happening.

Carpet-Bombing Content

There are two problems with this carpet-bombing approach to content.

First, it is desensitizing. The pharmaceutical industry embarked on something like this for a decade or two, called “reach and frequency.” It meant blitzing doctors’ offices with come-hither wink-nod ex-cheerleader reps whose job it was to perform a canned script, get the doctors to sign a statement, and then leave them free drug samples.

I’m sure content-marketers would insist that this is not a valid analogy, but it’s not all that invalid either. The carpet-bombing of message is common to both. Just as with kids’ advertising on TV, the mind numbs after a while, and all that remains is the dull lizard-brain throbbing at the ghost of the memory of meaning.

The other problem with the “always be publishing” mantra is that it inevitably degrades quality. I remember during the “empowerment” craze, someone pointed out that if you empowered stupid people, you’d get powerful stupidity. And unless you believe all content is created equal, this brings up the same conundrum.

The Word Formerly Know as Content

“Content” has become a word whose connotation has become content-neutral. Here’s what I mean by that. Once upon a time, it was an epithet to say, “He’s all sizzle, but no content,” “that was zero-content consulting,” or, “the cover looked great, but the content didn’t live up to the promise.”

Nowadays, “content” too often means nothing more than the bits and bytes that take up space under a headline. (I want to take a moment to note an important exception, Valuable Content, whose very title insists on a value judgment; kudos to them. But they are all too rare).

“Never write another article again! Generate thousands of highly unique [sic] top-quality articles at the push of a button!” …We GUARANTEE that no two generated articles will EVER have more than 25% duplicated content (usually far less than that). The odds are one in ten million that two articles will be 20% the same…”

He can do this because he’s generated “spinner” software that looks up synonyms and the like and generates nearly infinite variations on “content,” all of which are “unique” in the search engine optimization game driven by Google. And we have come to refer to this as “content.”

In this world, even the old line about a thousand monkeys typing for a thousand years and writing Shakespeare is no longer funny! Because the “point” of “content” is no longer literature, or even meaning – content has become the pink slime of words.

The point of “content” is to push our reptilian buttons, increase our SEO ratings, and raise our Klout scores.

I can live with art for art’s sake having been lost; even education for education’s sake. But when meaning for the sake of meaning is lost, I don’t know what to do.

What do words mean when words aren’t intended to have meaning?

Pink Slime Trusted Advisor

Here’s the other dot to connect (the first one was Always Be Publishing).

Proactively monitor support distribution lists/customer service ticket delegations for potential escalated issues with customer accounts in order to curb potential dissatisfaction issues which may include responding to customer “how to” questions; Update customer delegate Helpdesk, Trending, and Incident tickets requesting update and closure

Knowledge requirements include MOAM1, LIAM1, and DCAM1

When Maister, Galford and I wrote The Trusted Advisor in 2000, we started by saying, “While none of us begin our career as a trusted advisor, that is the status to which most of us aspire.”

At the time, it seemed an unremarkable comment. Imagine our astonishment if someone had told us, “Hey, in only 12 years, there will be over 400 trusted advisors in just one insurance company – and in their Michigan operations alone!” Not to mention they’d be required to know MOAM1.

Words in a Meaningless Environment

Just because I’m paranoid doesn’t mean there’s nothing to be afraid of. I happen to believe that if we are subjected to a campaign of verbal carpet-bombing and told it’s marketing, and that if all of us are taught that the road to success is to always be publishing more content than our neighbors, then there are certain predictable outcomes:

Words will progress asymptotically toward meaninglessness

“Content” will become the verbal equivalent of beige, no longer requiring a qualifying adjective

Writing will become mechanized

Oh wait, we already established that’s what happening.

4. The abuses of language outlined above will cross over. In addition to losing connotative meaning, they will cause us to lose denotative meaning. We will no longer be able to tell a trusted advisor from a transactional subject matter expert.

That means the first exhibit in our book, which portrayed a 4-step progression from subject matter expert to trusted advisor, will be rendered not just meaningless, but incomprehensible to many.

Apparently that’s already happened to the people who write employment ads.

Both Andrea Howe and I are experienced bloggers; 15 years and 1500 blogposts between the two of us.

We are far less experienced at newsletters and email marketing, but have been dipping our toes in that water. Yesterday we both stubbed those toes.

The Offers

Andrea wanted to announce a books-for-keynotes offer; I wanted to announce a sales event in Chicago. Each of us was very concerned to keep the personal quality we have tried to hard to develop over the years.

Rather than use an automated mailing program, Andrea went with her personal Outlook. I chose the automated mailer route, but using a first name field where possible.

Murphy had a field day.

Andrea overdid the bcc capabilities of Outlook, generating error messages and returned emails in such a manner that she didn’t know who had actually received an email and who hadn’t.

My case was a little more blatant; not all the contacts in my database have been stored with first names, and the program, being the logical automaton that it is, addressed them by database field name. Thus some of you may have received an email addressing you as “Dear |FIRSTNAM|.”

Oops. I’m sorry.

The Minefields

We are all tip-toeing through minefields these days, attempting to keep deep links, while exploring weak links at the same time. Trying to keep things personal while looking for scale. Figuring out how to be trusted, while trying to develop business online.

I like to think I’m a little jaded, but I must confess I wasn’t expecting the following response from a now-former subscriber, who gave this reason for his desire to be taken off the mailing list:

“Because you started sending me emails with a fake person’s name as the sender. I guess not enough people are opening your emails so you think you have to fool us.”

Turns out he was used to receiving email from “Trusted Advisor Associates,” but when he saw mail from the same source with a person’s name, he figured it was a phony.

I guess the good news is, we’ve managed to create a trusted brand. But did it have to come at the price of my own name? (I can assure you, Andrea exists; I’ve met her. At least, that’s who she said she was…)

It’s an interesting problem. Andrea and I believe it’s not qualitatively different than at any other time, but the quantitative extent of things sure has ratcheted up.

I know, it sounds like an oxymoron, a setup line for a cheap joke. Indeed, mortgage brokers got a very bad name during the recent real estate bubble and financial downturn.

But that’s my point. Industry is not destiny. You do not have to live down to your industry’s reputation. In fact, a trustworthy approach to business is all the more apparent when you’re surrounded by the opposite.

Caught in an Interest Rate Updraft

In 2003, interest rates were near an all-time low—about 4.875 percent for a 30-year fixed rate mortgage. However, they started creeping upwards to about 6.75 percent. Many mortgage originators weren’t overly concerned about locking in rates for their customers. (Later they blamed others and ‘market conditions’ for not being able to secure rates for their customers’ benefit.

I chose to pay more than $48,000 in rate lock extensions. Most people thought I was crazy. “Why are you doing that?” they would ask. “It’s not as if those customers are coming back,” one of my colleagues stressed. But I felt my reputation was on the line.

As it turned out, every one of those customers continued to do business with me. I delivered on what I promised. As a result, I assisted them with refinances, investment home purchases, second mortgages and new homes, in addition to the second and third generation referrals that resulted. My investment of $48,000 was repaid – many times over.

I was intrigued enough to continue to the dialogue. Here it is.

Interview with Daniel Milstein

Charlie: What perception do you think people have of the business practices of the mortgage industry?

Daniel: Here’s the thing. The financial meltdown, people losing their homes, the foreclosures and everything that the banking or lending industry has done over many years is still fresh in people’s minds. There was a point where used car salespeople were treated and looked at better than the mortgage people, but the industry has cleaned up considerably. It’s not the same anymore.

Now, it’s difficult to get licensing. With so many rules and regulations, it’s the best of the best and the smartest of the smartest people who are still in business; we saw a decline of 65% in mortgage jobs over the last couple of years. That has had a cleansing effect.

Charlie: What are some of the changes the industry has had to make?

Daniel: You now have to have a clean criminal record, a certain educational attainment level, and those exams are not easy to pass. That has put a higher premium on experience, and I believe on ethical behavior.

Charlie: Do you think people recognize good and ethical behavior when it’s presented to them?

Daniel: Absolutely. Knowledge is important more than ever before. Many years ago, loan officers were taking applications on a napkin. There were no regulations or training. It was a wild, wild world out there.

In my book I talk about a loan officer who was convicted of fraud and sent to jail. While in prison, he taught free classes on how to become a loan officer. There was a waiting list for his class, and they had testimonials from people who got out and got jobs in the mortgage industry as to how much money they were making.

Daniel: I’m told that only 55% of people pass the exam on the first try these days. We have disclosure rules now; we have cooling-off periods. These are all pluses.

Charlie: Why do you think more people in this industry don’t behave in the eminently sensible ways that you have described in your stories?

Daniel: I like to say, “desperate people do desperate things.” In our industry historically, the top 10% make 90% of the income, and the remaining 90% are out there scrambling. They do whatever they need to do to get the sale. So, out of desperation, they do things they shouldn’t be doing. Thath’s why we’ve now got safeguards and checks and balances in place.

Charlie: Do you believe that good, ethical, customer-focused businesses are also high-profit practices?

Daniel: Absolutely. Don’t look at a client as a paycheck. If you love what you do, the money will come; and if you do a good job, you’re going to get referrals.

In any kind of sales, it’s all about getting referrals and repeat clients. If you don’t do good by your client the first time around, they will not come back and they will not refer. And you lose. It’s as simple as that.

Over 80% of my business is from repeat clients and referrals of satisfied clients. You don’t make all the money up front, but you make more over the years. You have to take a long-term perspective. And clients aren’t dumb; if you’re in it for the long haul, that’s part of what makes them trust you.

Wouldn’t you know it – someone disagreed with me! I know, hard to believe…

But in this case, the someone was pretty interesting and had some good points to make. So please meet Erich Dietz, of Mindshare Technologies.

——-

Charlie: Erich, welcome. Let’s jump right in. Consumers are getting surveyed to death… but how can one argue that the solution is as simple as changing the survey script?

Erich: You’re 100% right that every time a consumer turns around they are getting hit with surveys – surveys from every business they have ever interacted with. It’s a painful exercise that feeds a market research propeller head in an ivory tower somewhere who never shares what he/she knows; that’s what the problem is.

Which means I also agree with you that the solution is not as simple as changing a survey script.

Charlie: Well, now we’re getting somewhere!

Erich: This is one of those cases where dirt-simple solutions just aren’t realistic. Businesses must change their mindset – from surveying customers to engaging them.

Engagement derives from demonstrating respect for the customer’s time, showing that feedback is actually being used, and using surveys as part of a meaningful, recurring dialogue.

Charlie: So, it’s one of those mindset things: back to ground zero.

Erich: Did you really think otherwise? Me neither.

Unfortunately there will always be businesses that survey in a customer-unfriendly way. But I don’t think anyone is seriously proposing legislation to regulate or ban bad surveying.

What’s important is not how bad most surveying is – what’s important is how a smart company can take advantage of that. Let me suggest that if your business surveys the right way, then out of the 1,000 survey-invites the customer gets in a day, yours will be the one they elect to take. And that’s huge.

Charlie: That is pretty big, actually, and what you’re saying is the bad surveys actually make it easier for the really good ones to stand out.

So let’s jump to the question that begs: how does a business go about surveying the “right” way?

Erich: They increase their focus and commitment to structure, communication, and engagement. Let me start with structure.

Too many surveys are written for the surveyor; they end up long and rigid. Reduce the length of the surveys, focus more heavily on allowing customers to share their experiences, wants, interests, etc. in their own words. This is a radical change from asking the customer to conform to their rating scales or menu choices on every data point.

Transactional surveys should be no more than 2 minutes, and should set accurate expectations with the invite (e.g. “please answer 4 brief questions”).

I strongly recommend that, wherever possible, businesses compensate customers for their time. Think about ways to compensate the survey customer that can actually drive incremental revenue back into the business.

Charlie: Cool! What about communication?

Erich: When did you last feel that your feedback went anywhere meaningful? Most businesses miss the simple layup – tell the customer when they make a change based on customer feedback! You have to show customers you’re listening to – and acting on – the feedback they’ve spent their valuable time providing. Show them their time was not spent in vain.

Charlie: Common sense, even though it’s not common. Engagement?

Erich: Use surveys to enhance and deepen customer conversations. When a surveyed customer indicates service lapse, make sure the front line is empowered to follow up – personally.

Charlie: Erich, those are eminently sound recommendations. If all survey designers took your advice – well, that’s an interesting thought-experiment. It occurs to me the effect would be massive. Thanks so much for taking time with us.